FINRA Fines Broker for Unauthorized Trading

FINRA suspended a broker for exercising discretion in customer accounts without written authorization.

According to the AWC, the broker effected approximately 1,700 trades in 84 customer accounts "without written authorization." FINRA stated that while the customers were aware the broker was "conducting trading in their accounts," none had provided the required prior written authorization, nor had the firm accepted any of the accounts as discretionary. FINRA found that while subject to a heightened supervision plan that "prohibited his exercise of discretion," the broker executed approximately 230 discretionary trades in 34 customer accounts "without written authorization." FINRA also determined that the broker "inaccurately stated" on firm compliance questionnaires, in three consecutive years, that he did not exercise discretion in customer accounts.

FINRA found that the broker's conduct violated FINRA Rules 2010 ("Standards of Commercial Honor and Principles of Trade") and 3260(b) ("Discretionary Accounts"). 

To settle the charges, the broker agreed to (i) a three-month suspension from associating with any FINRA member in all capacities and (ii) a $10,000 fine.